Spotlight on economy: GDP growing much slower vs. prior recoveries

The economy may have grown more than 2% in the second quarter instead of a lackluster 1.7%, as first reported. But by virtually any historical measure, the U.S. continues to expand at its slowest rate in decades.

The Commerce Department on Thursday is expected to boost its estimate of gross domestic product for the April-to-June period to as high as 2.3%, according to economists polled by MarketWatch. The data will be released at 8:30 a.m. Eastern.

Also at 8:30 a.m. Thursday, the number of people applying for unemployment benefits is forecast to fall slightly to 330,000 in the week ended Aug. 24 from 336,000 in the prior week.

The second of three government estimates for quarterly growth is usually the most important because it includes nearly all the information not available for the preliminary GDP report (The department fills in the missing info using educated guesses).

A 2.3% growth rate, of course, is nearly a third faster than the original GDP calculation for the second quarter. And it would effectively match the nation’s average growth rate from mid-2009 to 2012 – the first three and a half years of the economic recovery.

The economy, however, still lags far behind it usual rate of growth, especially in the aftermath of a recession.

From 1929 to 2012, for example, the U.S. expanded at a 3.3% annual rate, adjusted for inflation. What that means right now is the economy is only growing about three-fourths as fast as it normally does – and even that may be overstating things.

The numbers look even worse compared to prior economic recoveries. The U.S. grew an average of 2.9% in the first four years after the 2001 recession, 3.3% in the first four years after the 1990-91 recession and 4% in the first four years after the 1981-82 recession.

It’s worth keeping in mind that each recovery has been slower than the last. That’s a sign that long-term changes in the compexion of the U.S. economy and stronger competition from the rest of the world are contributing factors.

Most economists also believe Washington has been a negative influence, though the political left and right naturally apportion the blame differently.

Yet regardless of who’s right, U.S. growth could remain sluggish until Washington figures out a way of “getting the economy moving again,” in John F. Kennedy’s famous phrase. Don’t expect much help anytime soon.